Question

Insurance for new roof on rental property $3,000 more than cost to replace. Roof not separate asset, so TT depreciates whole building with gain of $15,800. How to enter?

Forum|Forum|7 years ago
June 4, 2019
1 reply
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Hail storm 4/1/17. Insurance proceeds for new roof $26,063. Cost of new roof $22,767. Seems to me I should have a gain of $3,296, but roof is not a separate item on Turbotax. Building purchased 10/31/92. Cost (excluding land) $63,857. Depreciation through 12/31/16 $53,890. Turbotax wants to tax me on $15,800, the difference between the $26,063 paid by insurance and the land cost, assuming the building was totally destroyed, but only the roof was damaged. Is this the correct way to enter? I don’t have the roof as a separate asset in the rental property section. What about the cost to replace the roof? Do I start a new asset called roof at $22,767?

TurboTax Premier Online

P

PaulaM

Employee

No, do not add the roof as a new asset. The cost of the repair (replacement) would be entered as rental expenses. Add the insurance reimbursement as rental income.

Taxes are then paid on the $3,296 difference. See article below for reference.

Tax implications of Involuntary Conversions

[edited 1/11/18 5:36 pm PST]

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M

maglib

Employee

I would think there is no new asset to add since there was no bottom line cost. Just a gain from insurance proceeds in excess of cost. Otherwise OP would get benefit twice. See a response from another superuser to a similar question: <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4133912-for-a-rental-property-the-insurance-payments-are-greater-than-actual-losses-what-is-correct-tax-treatment">https://ttlc.intuit.com/questions/4133912-for-a-rental-property-the-insurance-payments-are-greater-than-actual-losses-what-is-correct-tax-treatment</a>

**I don't work for TT. Just trying to help. All the best. ***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.